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Probability

1) The document discusses probability concepts including sets, unions, intersections, complements, Venn diagrams, and counting principles. 2) It provides examples to illustrate finding the union and intersection of sets, using Venn diagrams to represent set relationships, and using counting principles to calculate the number of possible outcomes for multi-stage experiments. 3) Key probability topics covered are permutations, which are arrangements with a specific order, and the permutation formula used to calculate the number of arrangements of objects taken a certain number at a time from a set.
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0% found this document useful (0 votes)
35 views

Probability

1) The document discusses probability concepts including sets, unions, intersections, complements, Venn diagrams, and counting principles. 2) It provides examples to illustrate finding the union and intersection of sets, using Venn diagrams to represent set relationships, and using counting principles to calculate the number of possible outcomes for multi-stage experiments. 3) Key probability topics covered are permutations, which are arrangements with a specific order, and the permutation formula used to calculate the number of arrangements of objects taken a certain number at a time from a set.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CHAPTER 7: PROBABILITY

SETS AND SET OPERATIONS Example 1: Given:

A set is a collection of objects. The objects U = { 1, 2, 3, 4, 5, 6, 7, 8, 9 }


in a set are called the elements of a set. A = { 2, 4, 6, 8 }
B = { 6, 7, 8, 9 }
1. The Union of sets A and B ( AUB ) – is
the set of all elements found in A or in B or Find: a) AUB
in both. b) A∩B
c) Bc

B Solution:
A D
a) AUB = { 2, 4, 6, 7, 8, 9 }

C b) A∩B = { 6, 8 }

c) Bc = { 1, 2, 3, 4, 5 }
The shaded figures above show AUB and
CUD respectively. Take note of the following keywords for each
operation as follows:
2. The Intersection of sets A and B (A∩B)
– is the set of all elements found in A and in Union → or
B. Intersection → and
Complement and difference → not

D
VENN DIAGRAM PROBLEMS
BB
A Venn diagram is the representation of sets
C and their relationships.

Example 2: Twenty five CE reviewees were


asked about which subject they like most.
The shaded figure above shows A∩B and
Of these 14 like Math, 12 like Hydraulics and
C∩D is empty.
10 like structural Design. There are 4 who
like Hydraulics and Structural Design, 6 like
The Complement of Set A ( Ac ) – is the set
both Math and Hydraulics, and 3 like both
of all elements found in the universal set
Structural Design and Math.
( U ) but not in A. The universal set is the
a) How many like the 3 subjects?
totality of all the elements considered.
b) How many like Math only?
c) How many of the students like at
U
least 2 subjects?
A
Solution:
There are 3 sets in the problem namely, the
set of students who like Math, the set of
The shaded figures above show Ac. student who like Hydraulics and the set of
106
students who like Structural Design. The neither of the above mentioned capacities,
Venn Diagram is shown below. and the rest have only 8 MB flash disks.
How many of them have 8 MB flash disks?

U = 25 Solution:

M H U = 30
6–x 4 MB
m h
10 8 x
x
4–x
3–x 8 MB 5

d
D 10 + 8 + 5 + x = 30
x=7

Let: m = no. of students who like Math No. of respondents with 8 MB = x + 8


only
No. of respondents with 8 MB = 1
m = 14 – ( 6 – x ) – ( 3 – x ) – x
m=5+x
COUNTING PRINCIPLE
Let: h = no. of students who like
Let E be a multi-stage experiment. If n1,
Hydraulics only
n2, n3, ... ,nk are the number of possible
h = 12 – ( 6 – x ) – ( 4 – x ) – x
outcomes of each of the k stages of E
h=2+x
respectively , then there are

Let: d = no. of students who like


n1  n2  n3    nk
Structural Design only
d = 10 – ( 3 – x ) – ( 4 – x ) – x possible outcomes for E.
d=3+x
Example 4: How many two – digit number
a) 25 = ( 5 + x ) + ( 2 + x ) + ( 3 + x ) containing 2 different integers can be formed
+(6–x)+(4–x) from the integers 3, 4, 5 and 6?
+(3–x)+x
x=2 Solution:

b) m=5+x The first stage is the filling out of the ten’s


m=7 digit and the second is the filling out of the
unit’s digit. There are 4 given integers, thus
c) At least 2 means 2 or more. we have 4 ways in filling out the ten’s digit
No. of students = 4 + 2 + 2 + 1 and left with 3 ways in filling out the unit’s
No. of students = 9 digit.

Problem 3: A survey involving 30 no. of 2 – digit numbers = 4 ∙ 3


respondents on the memory sizes of flash no. of 2 – digit numbers = 12
disks that they have revealed the following
results: 18 have 4 MB flash disks, 8 have
both 4MB and 8 MB flash disks, 5 have
107
Example 5: A developer of a new Solution:
subdivision offers a prospective home buyer position of pitcher
a choice of 4 designs, 3 different heating position of catcher
systems, a garage or carport, and a patio or
a screened porch. How many plans are
available to this buyer? No. of ways = 2 ∙ 3 ∙ 7 ∙ 6 ∙ 5 ∙ 4 ∙ 3 ∙ 2 ∙ 1
No. of ways = 30,240
Solution:

No. of plans = ( 4 )( 3 )( 2 )( 2 )
PERMUTATION
No. of plans = 48
Permutation is an arrangement with specific
order of all or part of a set of objects.
Example 6: In a certain city in the
Philippines, all seven – digit telephone Symbol: nPr reads as “the permutation of n
numbers begin with 350. How many objects taken r at a time”
telephone numbers may be assigned to that
city if the last four digits should not begin or n!
nP r =
end in zero?
 n  r !
Solution:
Let a set S contains 5 letters namely S, T,
The telephone nos. are formed in the O, N, E as shown below. The symbol 5P2
following manner. means the arrangement of any 2 letters
taken from the given 5 letters.
3 , 5 , 0 , __, __, __, __
Thus we have ST, TS, ON, NO, SO, OS,
etc.
not zero not zero

The number of telephone numbers is equal S T


to the number of ways in assigning numbers
to the 4 vacant places. Note that the
numbers can be repeated. O N
E
No. of tel. nos. = ( 9 )( 10 )( 10 )( 9 )
No. of tel. nos. = 8,100

Set S
Example 7: In how many ways can a
baseball coach assign positions to a team of
Example 8: How many numbers containing
nine men if only two men are qualified to be
3 different digits can be formed from the
pitcher, and only three other men are
integers 1, 2, 3, 6, 8 and 9?
qualified to be catcher, but all the men are
qualified to play any other positions?
Solution:

The 3 – digit number can be formed by


arranging any 3 integers from the given 6
integers.
108
No. of 3 – digit no. = 6P3 Example 12: In how many ways can 4
No. of 3 – digit no. = 120 different Math books, 3 surveying books and
2 structural books be arranged on a shelf

Example 9: Each of the three departments a. If the books can be placed anywhere
in a company needs a secretary and there on the shelf.
are 5 qualified applicants? In how many
ways can these positions be filled up? b. If the math books are to be kept
together but the others can be placed
Solution: anywhere?

The no. of ways of filling the positions c. if books of the same subject are to be
correspond to the arrangement of any 3 kept together?
out the 5 qualified applicants.
Solution:
No. of ways = 5P3
a) Since the books can be placed anywhere,
No. of ways = 20
the no. of arrangements equals n!

Example 10: Five persons enter a bus with


No. of arrangements = 9!
8 vacant seats. In how many ways can they No. of arrangements = 362,880
be seated?
b) The math books will be taken as one unit,
Solution:
thus instead of using n = 9, we use n = 6.
( 3 surveying + 2 structural + 1 math )
No. of ways = 8P5
But take note that the math books taken as
No. of ways = 6,720 1 unit can be arranged in themselves in 4!
Ways.
Theorems:
 Permutations of n objects taken n No. of arrangements = 6! ∙ 4!

( or all ) at a time. No. of arrangements = 17,280

nPn = n!
c) Books of the same subject are grouped
together, thus we use n = 3 (3 subjects)
Example 11: A school chess team has 6
But take note that the books can be
members, one of which is the team captain.
If they are to compete in 6 simultaneous arranged also by themselves in their group.
games, board 1 to 6, how many
arrangements can they make if the team No. of arrangements = 3! ∙ 4! ∙ 3! ∙ 2!
captain should always be in board 1?
No. of arrangements = 1,728
Solution:
Example 13: In how many ways can a party
of 6 people be seated in a row of 6 seats if
Since the team captain occupies board 1,
then the no. of arrangements is equal to the a. they can be seated anywhere?
arrangement of the 5 remaining members.
b. 2 persons insist in sitting side by side to
No. of arrangements = 5! each other.
No. of arrangements = 120

109
c. certain 2 persons refuse sit next to Example 15: There are 7 flags consisting of
each other? 3 undistinguishable red flags, 3
undistinguishable blue flags, and 1 white
Solution:
flag. How many different signals can be
formed, each consisting of the 7 flags hung
a) No. of ways = 6!
one above the other?
No. of ways = 720
Solution:
b) No. of ways = 5! ∙ 2!
No. of ways = 240 n!
P=
p ! q! r !
c) The answer for this question is the 7!
P=
difference of the answers in ( a ) and ( b ). 3! 3!
In ( a ), we have the total arrangements and
in ( b ) we have the arrangements when the P = 140
2 are seated side by side. The difference is
the arrangements where the 2 are
 Circular permutations of n objects.
separated.
P = ( n – 1 )!
No. of ways = 6! - 5! ∙ 2!
Example 16: In how many ways can 5
No. of ways = 480
different trees be planted in a circle?

 Permutations of n objects with p, q Solution:


and r are alike.
n! No. of ways = 4!
P=
p ! q!r ! No. of ways = 24

Where: n = the total no. of objects


Example 17: In how many ways can 7
p = no. of objects of one kind
people sit on a round table with 7 seats if
q = no. of objects of a 2nd kind
r = no. of objects of a 3rd kind certain 2 people refuse to sit side by side?

Solution:
Example 14: How many permutations are
there in the word COMMITTEE if the letters No. of ways = 6! – 5!∙2!
are taken all at a time?
No. of ways = 480
Solution:

There are nine letters all in all ( n = 9 ), COMBINATION


2 M’s, 2 T’s, and 2 E’s.
Combination is a subset containing r objects
n! from a set with n objects.
P=
p ! q! r !
Symbol: nCr reads as “the combination of n
8! objects taken r at a time”
P=
2! 2! 2!
n!
nCr =
P = 5,040 r !  n  r !

110
Let a set S contains 5 letters namely S, T, No. of games = 10C2
O, N, E as shown below. The symbol 5C2 No. of games = 45
means the subsets containing 2 elements
from set S.
Example 19: How many triangles are
determined by 12 points no three of which
are collinear?
S T
Solution:

O N The no. of triangles corresponds to the


combination of 3 points from the 12 given
E points because for every 3 pts, a triangle
can be drawn.

Set S No. of triangles = 12C3


No. of triangles = 220
Some of the combinations are the following:
Example 20: From 7 engineers and 5
scientists, a committee of 7 members to
S T O N N S T N assess damage due to earthquake is to be
formed. In how many ways can the
committee be formed if

Theorems: a) the committee is to consists of 3


 Combination of n objects taken r at a engineers and 4 scientists.
time. b) the committee is to consists of at least
n! 4 engineers?
nCr =
r !  n  r !
c) the committee is to consists of at most
 Combination of n objects taken n 4 engineers?
( or all ) at a time.
Solution:
nCn =1
a) No. of ways = 7C3 ∙ 5C4
 Combination of n objects taken 1, 2, 3,
No. of ways = 175
…n at a time.
+ nC2 + . . . + nCn = 2n – 1 b) No. of ways = 7C4 ∙ 5C3 + 7C5 ∙ 5C2
nC1
+ 7C6 ∙ 5C1 + 7C7

Example 18: A basketball conference No. of ways = 596


games has 10 teams. If each team plays
every other team, how many conference c) No. of ways = 7C4 ∙ 5C3 + 7C3 ∙ 5C4
games are played? + 7C2 ∙ 5C5
No. of ways = 546
Solution:
Example 21: In how many ways can a
The no. of conference games corresponds student choose reference books on
to the subset ( or combination ) of the 10 Mathematics if there are 5 books available?
teams taken 2 at a time because for every 2
teams, one game is played.
111
Solution:  Probability of an Event ( P )

No. of ways = 25 – 1 n(E ) successful outcomes


P( E ) = =
No. of ways = 31 nS  total outcomes

Example 22: In how many ways can a where: n( E ) = no. of elements in E


president invite 3 or more of his 8 friends to n( S ) = no. of elements in S
a tea?
Since 0 ≤ n( E ) ≤ n( S )
Solution: then 0 ≤ P( E ) ≤ 1.
No. of ways = ( 28 – 1 ) – ( 8C1 + 8C2 )
No. of ways = 219 If P( E ) = 0, the event will not happen
and if P( E ) = 1, the event will surely
happen.
PROBABILITY

Definition of Terms: Example 23: From a pack of standard


playing cards, a card is drawn. What is the
1. Experiment – is any process that
probability that the drawn card is a spade?
generates a set of data.

Examples: Solution:

a) Tossing a coin n( S ) = 52 and n( E ) = 13


b) Tossing a die
13
2. Sample Space ( S ) – is the set of all P( Spade ) =
52
possible outcomes of an experiment.
1
P( Spade ) =
Examples: 4

a) In tossing a coin, the sample


Example 24: In a single toss of a pair dice,
space is S = { H, T }.
find the probability of tossing a sum of at
most 7.
b) In tossing a die, the sample space
is S = { 1, 2, 3, 4, 5, 6 }.
Solution:
3. Event ( E ) – is a subset of the sample
( 1, 1 ), ( 1, 2 ), ( 1, 3 ), ( 1, 4 ), ( 1, 5 ), ( 1, 6 )
space.
( 2, 1 ), ( 2, 2 ), ( 2, 3 ), ( 2, 4 ), ( 2, 5 ), ( 2, 6 )

Examples: ( 3, 1 ), ( 3, 2 ), ( 3, 3 ), ( 3, 4 ), ( 3, 5 ), ( 3, 6 )
( 4, 1 ), ( 4, 2 ), ( 4, 3 ), ( 4, 4 ), ( 4, 5 ), ( 4, 6 )
a) The event of obtaining a head in
( 5, 1 ), ( 5, 2 ), ( 5, 3 ), ( 5, 4 ), ( 5, 5 ), ( 5, 6 )
tossing a coin is E = { H }.
( 6, 1 ), ( 6, 2 ), ( 6, 3 ), ( 6, 4 ), ( 6, 5 ), ( 6, 6 )
b) The event of obtaining an even
number in tossing a die is
The Sample Space is listed above with the
E = { 2, 4, 6 }. elements in the event enclosed.

n( S ) = ( 6 )( 6 ) = 36
n( E ) = 21

112
n(E )  The Additive Rule
P=
nS  ( The OR Type )
21
P= a) Non – mutually exclusive events
36
- with common outcomes
7
P=
12
U
Example 25: A committee of 5 is selected
by lot from a group of 6 men and 4 women. P( A ) P( A∩B ) P( B )
What is the probability that it will consist
exactly of 3 men?

Solution:
6 C3  4 C2 P( AUB ) = P( A ) + P( B ) – P( A∩B )
P=
10 C5
b) Mutually exclusive events
10 - without common outcomes
P=
21
U
Example 26: Three English books, 4
French books, and 2 German books are
P( A )
arranged on a shelf with space for 9 books.
P( B )
What is the probability that the English
books all together?

Solution: P( AUB ) = P( A ) + P( B )
7!  3!
P=
9! Example 28: A card is drawn from a deck
1 of playing cards. Find the probability of
P=
12
a) Obtaining a king or a queen.
 Probability of an event E not to b) Obtaining an ace or a spade.
occur ( Q )
Solution:
unsuccessful outcomes
Q =
total outcomes a) This is a mutually exclusive events
situation because if a card drawn
P + Q = 1 or Q = 1 – P shows a king it can never be a queen.
Also if a card shows a queen it can
Example 27: The probability of John of never be a king.
winning a certain game is 0.72. What is the
probability that John will lose whenever he P( KUQ ) = P( K ) + P( Q )
plays the game?
4 4
P( KUQ ) = +
52 52
Solution:
Q = 1 – 0.72 2
P( KUQ ) =
13
Q = 0.28
113
b) This is a non – mutually exclusive 5 C4 4 C4 6 C4
P= + +
events situation because if a card is
15 C 4 15 C 4 15 C 4
drawn and it shows an ace, there is a
1
possibility that the ace card is also a P=
spade since we have an ace spade 65
card.
 The Product Rule
P( AUS ) = P( A ) + P( S ) – P( A∩S ) ( The AND Type )
4 13 1
P( AUS ) = + –
52 52 52 Dependent Events:
4 The outcome of the second event B is
P( AUS ) = affected by the outcome of the first
13
event A.
Example 29: A class contains 10 men and
P( A∩B ) = P( A ) x P( B/A )
20 women of which half the men and half
the women have brown eyes. Find the
Independent Events:
probability that a person chosen at random
is a man or has brown eyes. The outcome of the second event B is
not affected by the outcome of the first
Solution: event A.
Note that in this case P( B/A ) = P( B ).
P( MUB ) = P( M ) + P( B ) – P( M∩B )
P( A∩B ) = P( A ) x P( B )
10 15 5
P( MUB ) = + –
30 30 30 Example 31: An urn contains 4 red balls, 3
2 blue balls and 7 white balls. All the balls are
P( MUB ) =
3 of the same size.

Example 30: A committee of 4 is chosen by a) If 3 balls are drawn in succession from


lot from 5 CE, 4 ME and 6 EE. the urn without replacement, find the
probability that all the balls are white.
a) Find the probability that the
committee is composed of all CE. b) If 3 balls are drawn from the urn in
succession, find the probability that all
b) Find the probability that the committee the balls are red if after each draw, the
is composed of members of just one ball is replaced in the urn.
profession.
c) If 3 balls are drawn in succession from
Solution: the urn without replacement, find the
5 C4 probability that the first is red, the
a) P=
second and third are blue.
15 C 4

1 Solution:
P=
275
a) This is a case of dependent events
b) The committee may be all CE, all because the elements in the sample
ME or all EE. space( the total number of balls in the
urn ) decreases by 1 after each draw.

114
Thus we have, b) P = ( 0.96 )( 0.10 )
7 6 5 P = 0.096
P=  
14 13 12
5 c) P = ( 0.04 )( 0.10 )
P=
12 P = 0.004

b) This is a case of independent events


because the outcome of the  Combinations between OR Type
succeeding draw is not affected by the and AND Type
outcome of the previous draw because
the ball is replaced in the urn after each Example 33: Two cards are drawn from a
draw. Thus we have, standard deck of playing cards. Find the
probability that one is a spade and one is a
4 4 4 heart.
P=  
14 14 14
Solution:
8
P=
343
The outcomes may be spade followed by
heart or heart then spade. Thus, we have
4 3 2
c) P=  
14 13 12 13 13 13 13
P=   
1 52 51 52 51
P=
91 13
P=
102
Example 32: A barangay has one fire truck
and one ambulance available for
emergencies. The probability that the fire Example 34: One box contains 4 – 25 KW
truck is available when needed is 0.96 and lamps and 3 – 40 KW lamps; and a second
that the ambulance is available when bag contains 3 – 25 KW lamps and
needed is 0.90. In the event of an injury 5 – 40 KW lamps. A lamp is drawn at
resulting from a burning building, find the random from the second box and placed
probability that unseen in the 1st box. What is the
probability that a lamp now drawn from the
a) both the fire truck and the ambulance 1st box is a 40 – KW lamp?
are available.
Solution:
b) the fire truck is available while the
ambulance is not. The event of drawing a 40 – KW lamp from
the second box is dependent to the outcome
c) both the fire truck and the ambulance of the lamp drawn from the first box which
are not available. maybe a 25 – KW or 40 – KW lamp. Thus,
we have the following outcomes.
Solution:

a) P = ( 0.96 )( 0.90 ) 25 – KW from the 2nd and 40 – KW


from the 1st or 40 – KW from the 2nd
P = 0.864 and 4 – KW from the 1st

115
In terms of the probabilities, we have 4
b) P=  24 Cr (0.12)r (0.88)24  r
r 0
3 3 5 4
P=   
8 8 8 8 P = 0.847
29
P=
64 5
c) P=1–  24 Cr (0.12)r (0.88)24  r
r 0
 Repeated Trial Probability
P = 0.0597
( The Binomial Formula )

The probability that an event can occur


exactly r times in n trials is ODDS OF AN EVENT

P = nCrprqn – r  Odds in favor for an event to


successful outcomes
where n = total number of trials occur =
unsuccessful outcomes
r = successful trials
= P/Q
p = probability of success
q = probability of failure  Odds against an event to
unsuccessful outcomes
Note: The binomial formula is used only if occur =
the probability of success( p ) and probability successful outcomes
of failure( q ) remains the same in every trial. = Q/P
Example 35: A coin is tossed 8 times. Find
the probability of getting exactly 3 heads. Example 37: A card is selected at random
from a deck of 52 cards. What are the odds
Solution: against selecting a 5?

P = 8C3( 0.5 )3( 0.5 )5 Solution:

7 unsuccessful outcomes
P= Odds against a 5 =
32 successful outcomes
48
Example 36: A real estate agent has a Odds against a 5 =
probability of 0.12 to make a sale for every 4
person he approaches. Given that he Odds against a 5 is 12: 1.
approaches 24 persons, what is the
probability that he makes

a) exactly 4 sales Example 38: A weather forecast states that


the probability of rain the next day is 40%.
b) 4 or fewer sales What are the odds that it will rain tomorrow?

c) more than 5 sales Solution:

Solution: Odds of rain = P/Q


Odds of rain = 40:60 or 2:3
a) P = 24C4( 0.12 )4( 0.88 )20
Odds of rain is 2:3.
P = 0.171

116
Example 39: There are 3 candidates A, B, Example 40: In a die–tossing game, you
and C for a Mayor in a small Town. The pick a number from 1 to 6 and make a bet
odds that A will win are 5:3 and the odds on it. When the die is tossed, if the number
that B will win are 1:2. What is the you picked occurs you win twice the amount
probability that C will win? bet, otherwise you lose your amount bet.
What is your expectation if you bet 100 on
Solution: 4?

P( A ) 5 Solution:
Odds that A will win = =
1  P( A ) 3
The probability that 4 occurs is 1/6 and the
3P( A ) = 5 – 5P( A ) probability not 4 is 5/6. Thus, the
expectation is
8P( A ) = 5
n

   
5
P( A ) = Expectation = P Xk  Xk
8
k 1
P( B ) 1
Odds that B will win = =
1  P( B ) 2
1 5
Expectation = ( 100 x 2 ) + ( –100 )
2P( B ) = 1 – P( B ) 6 6
3P( B ) = 1
Expectation = - P 50
1
P( B ) =
3 This means that, on average, the player
will lose 50 every time this bet is made.
P( A ) + P( A ) + P( C ) = 1
Example 41: An insurance company
5 1 charges a premium of 50 for a 1–year 
+ + P( C ) =1
8 3 10,000 insurance plan for a 20–year old
man. The company knows that the
1
P( C ) = probability that a 20–year old man will die
24
within a 1 year period is 0.000784. What is
the company’s expectation on this insurance
policy?
MATHEMATICAL EXPECTATION OR
EXPECTED VALUE ( E ) Solution:

In a gambling game, the expected value Let X1 be the event that the person dies
E of the game is considered to be the value within 1 year. Then P( X1 ) = 0.000784, and
of the game to the player. The Expected the company must pay out P10,000.
value is equal to the sum of the products of Because the company charged P 50 for
the probability times the prize. If E is the policy, the company’s actual loss is
positive, the game is favorable to the player, 9,950. Let X2 be the event that the policy
if negative unfavorable, and fair if equal to holder does not die during the year of the
zero. Sometimes expected value is called policy. Then P( X2 ) = 0.999216, and the
mathematical expectation or expected company keeps the premium of P 50. Then
winnings. the company’s expectation is

E = probability x Prize

117
n to the total prizes. This fair price is equal to
Expectation =
 P  X k   X k 
k 1
the mathematical expectation of a ticket
buyer.

Expectation = 0.999216( 50 ) E=
5
 500   10  250   10  100 
100 100 100
+ 0.000784 ( –9,950 )
E = 70
Expectation = 42.16

This means that, the company earns, on


average, P 42.16 for each policy sold.

Example 42: WMT construction specializes


on road construction makes a bid on a
project to build the Mambaling Underpass.
The company estimates its potential profit as
shown in the table below. What is the profit
expectation for the company?

Solution:

Profit / Loss Probability

P 3,750,000 0.10

P 2,500,000 0.25

P 1,000,000 0.50

– P 500,000 0.10

– P 250,000 0.05

Expected Profit = ( 0.10 )( 3,750,0000 )


+ ( 0.25 )( 2,500,000 )
+ ( 0.50 )( 1,000,000 )
+ ( 0.10 )( - 500,000 )
+ ( 0.05 )( - 250,000 )

Expected Profit = 1,437,500

Example 43: What is the fair price to pay


for a lottery ticket if there are 100 tickets,
and 5 prizes of P 500, 10 prizes of P 250,
and 20 prizes of P 100 each?

Solution:

The fair price to pay a ticket is such that if all


the tickets were sold the total sales equals

118

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